Question: Consider a competitive firm with the short-run cost function C(q) = 20 + 6q + 5q2 The firm faces a market price of p for

Consider a competitive firm with the short-run cost function

C(q) = 20 + 6q + 5q2

The firm faces a market price of p for its output.

a. Suppose the price of the firm's output is p = $26. What is the profit made by the firm? Will it stay in business in the short run? Provide appropriate reasons.

b. Suppose the price of the firm's output is p = $18. What is the profit made by the firm? Will it stay in business in the short run? Provide appropriate reasons.

c. Suppose the price of the firm's output is p = $18. Draw a welllabeled graph that shows the amount of the profit or loss. Make sure that in your graph you shade the amount of profit or loss, and include the ATC, AVC and MC curves.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

undefined Consider a competitive firm with the short-run cost function C(q) 100 + 4q. The firm faces a market price of p for its output. (a) What is the minimum value of p necessary for the rm to...

Question 2. [20 points] Consider a competitive firm with the short-run cost function C(q) = 100 + 4q2. The firm faces a market price of p for its output. (a) What is the minimum value of p necessary...

Homework assignment Suppose a perfectly competitive firm has the short-run cost function C - 125 - q-. Use the marginal cost to determine the firm's output level and profit at prices of $30 and $20....

assignments Suppose a perfectly competitive firm has the short-run cost function C = 1250 + q . Use the marginal cost to determine the firm's output level and profit at prices of R300 and R200. At...

Suppose a perfectly competitive firm has the short-run cost function C = 125 + q2. Use the derivative formula or marginal cost to determine the firms output level and profit at prices of $30 and $20....

Assume that a competitive firm has the total cost function: TC=1q 3 40q 2 +880q+2000 TC=1q3-40q2+880q+2000 Suppose the price of the firm's output (sold in integer units) is $550 per unit. Use...

Consider a competitive firm with an average cost function given by AC(Q)=2Q2-20Q+70. (1)Find the marginal cost function. . (2)Draw the firms average cost and marginal cost curves. (Make sure to label...

Consider a market with identical firms that each have the cost function: C = 64 + 20 Q+ 4 Q2 The market demand function is: QD = 2000 ce20 P The market starts in a long-run equilibrium. a) (15...

1 Suppose that the linear supply curve intersects the linear demand curve. The initial equilibrium is e. (1) Consider a specific (per unit) tax t, show the tax effect on Government revenue. (2) Now...

b) Below which price does firm A shut down? How about firm B?c) Above which price does firm A start to make positive profits? How about firm B? Question 3 (20 points) Consider an industry with two...

Fluoride ions specifically inhibit enolase in the presence of Pi in cell extracts. (a) Explain why both 2PG and 3PG accumulate in the presence of F- and Pi. (b) Explain why 1,3-BPG does not...

Consider the precession of the spin of a muon, initially longitudinally polarized, as the muon moves in a circular orbit in a plane perpendicular to a uniform magnetic field B. (a) Show that the...

Problem 1 5 - 9 ( Static ) ( LO 1 5 - 7 ) A partnership is currently holding \ ( \ $ 4 0 0 , 0 0 0 \ ) in assets and \ ( \ $ 2 3 4 , 0 0 0 \ ) in liabilities. The partnership is to be liquidated, and...

Apply e.g. explain how to use - the 4 overarching strategies to develop a sustainable advantage to a Legends/Okoboji Grill type restaurant. FYI - Legends is a bar/grill type informal Iowa-based...

2. In this chapter, the reader should reflect on the following concepts: personal change competence, personal achievements, personal benchmarking, personal motivation strategy, personal mastery...

The tools are structured and for improving the individuals communication skills.

Always show respect for the other person or persons.